German Think Tank Report: Corporate Bankruptcies Hit 20-Year High, Affecting 170,000 Workers
A report by the German think tank IWH indicates that corporate bankruptcies in Germany reached a 20-year high last year, totaling 17,604 cases. In December alone, 1,519 companies filed for bankruptcy, 75% higher than pre-pandemic levels. This surge is attributed to the end of pandemic-era subsidies and rising interest rates since 2022, revealing structural challenges in the German economy.
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The German think tank, Halle Institute for Economic Research (IWH), released a report on the 8th stating that the total number of corporate bankruptcies in Germany last year reached 17,604, a 20-year high. In December alone, 1,519 companies filed for bankruptcy, approximately 75% higher than the average level before the pandemic. Even during the 2009 financial crisis, the number of German corporate bankruptcies was lower than last year's level.
The Halle Institute for Economic Research points out that the 'bankruptcy trend' is an important leading indicator for observing corporate bankruptcies and overall economic development. It is primarily based on bankruptcy announcements issued by registration courts across Germany, combined with an analysis of the financial data of relevant companies.
Steffen Müller, head of bankruptcy research at the Halle Institute for Economic Research and the report's author, analyzed that the current increase in corporate bankruptcies can no longer be explained by short-term post-pandemic effects or the past long-term low-interest rate environment.
He noted that during the pandemic, due to easy financing at low interest rates and government subsidies, some companies with weaker operational health were still able to operate. However, since 2022, with rising interest rates and the gradual cancellation of subsidies, these companies began to collapse, leading to a concentrated appearance of bankruptcy cases.
However, as this wave of post-pandemic bankruptcies gradually comes to an end, Müller believes that the current high number of bankruptcies more directly reflects the structural challenges facing the German economy.
Analysis shows that this wave of corporate bankruptcies is not concentrated in single-sized enterprises but shows a comprehensive spread. Although the number of bankruptcies is still dominated by small and medium-sized enterprises, the collapse of large enterprises has a more significant impact on the employment market.
According to the report, approximately 170,000 workers will be affected by corporate bankruptcies in 2025, with the manufacturing industry being the most severe, involving about 62,000 job opportunities. In addition to manufacturing, industries such as catering, hospitality, construction, and real estate development are also generally facing bankruptcy pressure.
Regarding the wave of corporate bankruptcies in Germany, Jonas Eckhardt, a partner at the corporate transformation consulting firm Falkensteg, told Der Spiegel that 'the German economy is no longer just a headache, but a fever.' For German small and medium-sized enterprises, the current situation is not just a short-term downturn in the business cycle, but a challenge for survival.
Müller, however, stated that there is no need to be overly pessimistic. Corporate bankruptcies have a certain regulatory function in a market economy, helping to eliminate poorly managed companies and redirect resources to more competitive companies, thereby driving overall industry adjustment. (Editor: Tang Shengyang) 1150410
The Halle Institute for Economic Research points out that the 'bankruptcy trend' is an important leading indicator for observing corporate bankruptcies and overall economic development. It is primarily based on bankruptcy announcements issued by registration courts across Germany, combined with an analysis of the financial data of relevant companies.
Steffen Müller, head of bankruptcy research at the Halle Institute for Economic Research and the report's author, analyzed that the current increase in corporate bankruptcies can no longer be explained by short-term post-pandemic effects or the past long-term low-interest rate environment.
He noted that during the pandemic, due to easy financing at low interest rates and government subsidies, some companies with weaker operational health were still able to operate. However, since 2022, with rising interest rates and the gradual cancellation of subsidies, these companies began to collapse, leading to a concentrated appearance of bankruptcy cases.
However, as this wave of post-pandemic bankruptcies gradually comes to an end, Müller believes that the current high number of bankruptcies more directly reflects the structural challenges facing the German economy.
Analysis shows that this wave of corporate bankruptcies is not concentrated in single-sized enterprises but shows a comprehensive spread. Although the number of bankruptcies is still dominated by small and medium-sized enterprises, the collapse of large enterprises has a more significant impact on the employment market.
According to the report, approximately 170,000 workers will be affected by corporate bankruptcies in 2025, with the manufacturing industry being the most severe, involving about 62,000 job opportunities. In addition to manufacturing, industries such as catering, hospitality, construction, and real estate development are also generally facing bankruptcy pressure.
Regarding the wave of corporate bankruptcies in Germany, Jonas Eckhardt, a partner at the corporate transformation consulting firm Falkensteg, told Der Spiegel that 'the German economy is no longer just a headache, but a fever.' For German small and medium-sized enterprises, the current situation is not just a short-term downturn in the business cycle, but a challenge for survival.
Müller, however, stated that there is no need to be overly pessimistic. Corporate bankruptcies have a certain regulatory function in a market economy, helping to eliminate poorly managed companies and redirect resources to more competitive companies, thereby driving overall industry adjustment. (Editor: Tang Shengyang) 1150410
FAQ
What are the main reasons for the record high corporate bankruptcies in Germany?
The main reasons are the end of low-interest rate environments and government subsidies after the pandemic, coupled with rising interest rates since 2022. This has led to the collapse of companies with weaker operational health.
Which industries are most affected by corporate bankruptcies?
The manufacturing industry is the most severely affected, with approximately 62,000 job opportunities at risk. Other industries facing bankruptcy pressure include catering, hospitality, construction, and real estate development.